The University of Chicago Organic Valley: Agent of Civil Society in the Market a Dissertation Submitted to the Faculty of the Di
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THE UNIVERSITY OF CHICAGO ORGANIC VALLEY: AGENT OF CIVIL SOCIETY IN THE MARKET A DISSERTATION SUBMITTED TO THE FACULTY OF THE DIVISION OF THE SOCIAL SCIENCES IN CANDIDACY FOR THE DEGREE OF DOCTOR OF PHILOSOPHY DEPARTMENT OF SOCIOLOGY BY TAL YIFAT CHICAGO, ILLINOIS DECEMBER 2016 Table of Contents List of Figures ...........................................................................................................................iv List of Tables .............................................................................................................................. v Acknowledgements ...................................................................................................................vi Abstract .................................................................................................................................. viii Chapter 1: Introduction ............................................................................................................. 1 The Puzzle of Maintaining High and Stable Pay Prices ........................................................ 5 The Puzzle of Reproducing Civil Society Identity ............................................................... 11 Methods .............................................................................................................................. 20 Chapter 2: Organic Valley - Overview .................................................................................... 28 Governnce ............................................................................................................................ 31 Economic Structure ............................................................................................................ 39 Chapter 3: Theoretical Framework ........................................................................................ 52 The Value Chain .................................................................................................................. 54 The Lead Firm ..................................................................................................................... 58 The Transaction .................................................................................................................. 69 Chapter 4: Organic Valley as an Agricultural Cooperative ..................................................... 73 Agricultural Cooperatives and Agrarian Movements ..........................................................74 Organic Valley’s Social Movement Roots ............................................................................ 91 Conclusion.......................................................................................................................... 103 Chapter 5: Organic Valley’s Dairy Value Chain .....................................................................106 Organic Valley’s Value Chain ............................................................................................ 108 Partnerships as a Condition for Growth and Independence ............................................. 114 Leveraging the Mission in Value Chain Relatonships ....................................................... 121 Conclusion.......................................................................................................................... 126 ii Chapter 6: Maintaining High and Stable Prices.................................................................... 128 Price Detemination as a Business Focus ........................................................................... 128 Buffering Market Pressures through Relationships .......................................................... 132 Turning Complexity into Flexibility .................................................................................. 142 Conclusion.......................................................................................................................... 149 Chapter 7: Hybridization through Participatory Governance............................................... 151 Participatory Governance in Action .................................................................................. 154 Evolutionary Learning ....................................................................................................... 173 Conclusion.......................................................................................................................... 175 Chapter 8: Conclusion ........................................................................................................... 178 Agricultural Cooperatives as Civil Society Agents ............................................................. 178 Maintaining High and Stable Prices ................................................................................. 180 Reproducing Civil Society Identity .................................................................................... 182 Bibliography .......................................................................................................................... 185 iii List of Figures Figure 1: George Siemon address at Organic Valley's 2016 annual meeting ........................... 2 Figure 2: The trend toward fewer and larger dairy farms in the U.S. ...................................... 6 Figure 3: Number of Organic Valley dairy farms by herd size, 2013 ....................................... 9 Figure 4: Organic Valley's vs. conventional milk pay price over time .................................... 10 Figure 5: Organic Valley's governance structure .................................................................... 31 Figure 6: Number of members over time ............................................................................... 48 Figure 7: 2013 expense structure ........................................................................................... 50 Figure 8: Sales distribution ..................................................................................................... 51 Figure 9: Organic Valley's dairy value chain .......................................................................... 111 Figure 10: Milk shortage ........................................................................................................ 138 Figure 11: Product diversity of the Organic Valley brand ..................................................... 144 Figure 12: Fill rates of key products in 2015 ......................................................................... 148 iv List of Tables Table 1: Equity structure ........................................................................................................ 43 Table 2: Employee distribution ...............................................................................................47 Table 3: Organic Valley vs. WhiteWave expenses .................................................................. 49 Table 4: U.S. dairy cooperatives over time .............................................................................. 81 Table 5: The U.S. farming sector over time ............................................................................ 84 Table 6: Type and Size of U.S. dairy cooperatives in 2010 ...................................................109 Table 7: Organic Valley’s growth 1995-2000 ........................................................................ 155 Table 8: Overcoming hybridizing challenges through participatory governance ................ 172 v Acknowledgements I would like to thanks those whose support has been indispensable for my ability to complete this dissertation. I am grateful to the people of Organic Valley, for their willingness to welcome me and share their stories, knowledge, and unique culture. George Siemon’s endorsement of my research made it possible, and opened to me the doors (and farm gates) of the cooperative. Rebecca Zahm, my contact person at Organic Valley, coordinated my visits and made the research process so much smoother. I especially thank Rebecca and Jon, her husband, for offering their delightful and generous hospitality during my fieldwork in La Farge. I wish to express gratitude to my wife, Meredith, who had the thankless job of sharing the struggles of this long and arduous journey, but little of its creative satisfactions. I thank her for all of her efforts, and for the insistence that I should pursue the work that really mattered to me. In the last three years or so, my daughter, Lyla, joined us on this path, greatly adding to my joy and focus. My deep appreciation to my parents, whose support from afar sustained me in so many ways, and to my mother in law, Carol, who helped hold the (baby in the) fort during many of my work travels. I am thankful to my dissertation committee - Andy Abbott, Gary Herrigel and Lis Clemens – each of whom provided at critical moments invaluable support, guidance and inspiration that helped me move forward. It is my aspiration to grow my work and reach the level of scholarship they were directing me to. My research has developed through engagement with colleagues and friends who are too many to recognize here, but dialogues with Jessica Feldman, Yaniv Ron-El and Nate Ela were especially continuous and nurturing. I wish to thank Ira and Rachel for their Thursday meditation group that anchored my Chicago community for a long time, and the Chicago Men’s Group for having my back. vi Finally, the dissertation benefitted from the Charles R. Henderson Research Grant and University of Chicago Division of Social Sciences